Canada's largest undeveloped gold reserve with 8.8 million ounces in reserves Feasibility study underway Opportunities to improve project economics Average annual gold production of approximately 560,000 ounces at cash operating costs of $404/oz At $900/oz, pre-tax NPV of $1.19 billion at a 5% discount rate generating an IRR of 20.1%

Overview

The Detour Lake project is located on the northern most, relatively under-explored, Abitibi Greenstone Belt in northeastern Ontario. The property encompasses 265 square kilometres, including the Detour Lake deposit, which contains an open pit reserve of 8.8 million ounces of gold averaging 1.15 g/t. The Detour Lake deposit is situated in the area of the former Detour Lake mine, which was operated by Placer Dome and produced 1.8 million ounces of gold from 1983 to 1999. In addition, Detour Gold has a 50% interest in Block A located west of the Detour Lake project, which host an indicated resource of 1.2 million ounces.

The Detour Lake project is approximately eight kilometres west of the Ontario-Quebec border and 180 kilometres northeast of Cochrane, Ontario. Access to the property is available via the Detour Lake mine road, an extension of Highway 652 from Cochrane, as well as by air to the site's 1.6 kilometre gravel airstrip.

Detour Lake project - Location & general geology

Click to enlarge

Project History

The Detour Lake mine was discovered by Amoco Petroleum Limited in 1974. Most of the past exploration and mine development has been carried out by four main operators, including Amoco, Campbell Red Lake Mines, Placer Dome and Pelangio Mines Inc.

Amoco conducted the initial work between 1974 and 1979, followed by Campbell between 1979 and 1987, Placer Dome between 1987 and 1999 and Pelangio between 1999 and 2006. A minor amount of work was also completed by a number of small companies, such as Global Energy Limited, Gowest Amalgamated and Destor Resources Exploration.

The first mining activity at the property was by Campbell between 1983 and 1986, utilizing open pit methods. Campbell and then Placer Dome mined the deposit by underground methods until July 1999. Details regarding the original open pit are limited, but indications are that small-scale equipment and a selective mining approach were used. The open pit extended to a depth of approximately 120 metres with an estimated strip ratio of 4.5:1 (excluding low grade ore). Underground mining was conducted from the 120 metre level to approximately 785 metre below surface. Access for mining was provided by a 600 metre shaft located approximately 150 metre west of the open pit, as well as a series of ramps extending to the 785 metre level.

Past production totalled approximately 1,764,986 ounces of gold from the milling of just over 14.3 million tonnes of ore at an average recovered grade of 3.82 g/t, including 5.2 million tonnes grading 2.57 g/t (430,516 ounces) from the open pit and 9.1 million tonnes grading 4.98 g/t (1,464,431 ounces) from underground. Average mill recoveries were 93.2 %.

From 2004 to 2006, Pelangio drilled 127 holes totalling 29,780 metres. Results from this recent work outlined a near-surface gold resource (0 to 250 metres) of 160,000 ounces in the indicated category and 850,000 ounces in the inferred category.

Geology & Mineralization

The Detour Lake project is located within the northwestern portion of the Abitibi Greenstone Belt in the Superior Province of the Canadian Shield. The supracrustal rocks in the project area consist of mafic and ultamafic volcanic rocks of the Deloro Group in thrust contact to the south with the younger Porcupine sedimentary sequence. This regional east-west thrust zone is referred to as the Sunday Lake Deformation Zone ("SLDZ") and can be traced over a distance of more than 20 kilometres on the property. It is defined by a deeply mylonitized and mineralized siliceous alteration zone, referred as the Chert Marker Horizon ("CMH"), which marks the contact between the basaltic and ultramafic terranes.

The bulk of the gold mineralization at Detour Lake is found in the hanging wall of the CMH, in the Upper Detour Lake Formation, which is composed of a thick assemblage of iron-rich tholeiitic mafic flows that are predominantly massive to pillowed, with minor rhyolitic flows and tuffs.

The mineralized east-west corridor forms a 200 m wide (locally up to 350 m) zone that is characterized by swarms of steeply dipping mineralized quartz veining splaying off the CMH in the Upper Detour Lake Formation. The richest gold mineralized zones are commonly associated with increased biotite alteration, shearing, narrow quartz veining and pyrite or pyrrhotite. Local zones of strong brecciation with sulphide infilling have also been recognized along with chalcopyrite, telluride minerals and visible gold. Visible gold is usually found as specks, clusters or fracture coatings, and its abundance may be associated with the chlorite and chalcopyrite content of the vein. Pillowed flows or hyaloclastites are the preferred hosts to mineralized zones. In the area of the Calcite Zone, the gold mineralization is closely associated with weak potassic and strong carbonate alteration and often contains carbonate in veinlets and quartz veins.

Pre-feasibility Study

The Company announced the results of its pre-feasibility study on September 9, 2009. The following assumptions and parameters were used:

Assumptions
Gold price (US$/oz) (1)	775
Foreign exchange rate ($Cdn/$US)	1.18
Fuel price (US$/litre)	0.66
Income/mining tax rate (%)	27/10
Net Smelter Royalty (%)	2
Mine Parameters
Ore milled (Mt)	238.6
Waste mined (Mt)	907.9
Strip ratio (waste:ore)	3.8:1
Average gold grade (g/t)	1.15
Total contained gold (M oz)	8.81
Estimated gold recovery (%)	91.5
Total recovered gold (M oz)	8.06
Mine life (years)	14.5
Average annual gold production (oz)	560,000
(1) approximates the 3-year trailing average

Mineral Reserves and Resources (Effective date of September 9, 2009)

The open pit mineral reserves were estimated within a detailed engineered pit design by using the measured and indicated resources only. The optimized pit shell was generated using the Lerchs-Grossmann (LG) pit optimizer algorithm using the cost and economic parameters shown above. In the pit design, inter-ramp pit slopes vary from 49 to 53 degrees depending on rock type and structure orientation. The block model was prepared using the Ordinary Kriging method and the kriged block grades include an average dilution rate of 13.5%. The estimated proven and probable reserves total 8.81 million ounces, using a 95% mining recovery rate.

Reserve Category	Tonnes (millions)	Grade (g/t Au)	Gold Ounces (000's)
Proven	61.2	1.40	2,751
Probable	177.4	1.06	6,062
Total (P&P)	238.6	1.15	8,813

Click to enlarge

The table below summarizes the global mineral resources estimated by Ordinary Kriging at different cut-off grades.

Resource Category	Cut-off Grade (g/t)	Tonnes (millions)	Grade Capped(2) (g/t Au)	Gold Ounces (000's)
Measured (M)	0.4	124.1	1.30	5,194
	0.5	112.9	1.39	5,035
	0.6	102.1	1.48	4,846
Indicated (I)	0.4	521.0	0.91	15,195
	0.5	422.3	1.02	13,789
	0.6	343.8	1.12	12,417
Total (M&I)	0.4	645.0	0.98	20,389
	0.5	535.0	1.09	18,824
	0.6	445.9	1.20	17,263
Inferred	0.4	242.1	0.85	6,609
	0.5	190.8	0.96	5,877
	0.6	151.4	1.07	5,189
(1) Mineral reserves are included within the mineral resources reported. (2) Capping grade estimated by domains and varies from 20 g/t to 50 g/t.

The pre-feasibility study database included drilling data from the pre-Detour Gold programs, and Detour Gold's 2007, 2008, and 2009 drilling campaigns up to the cut-off date of June 1, 2009. It includes a total of 789,808 metres of drilling in 5,612 holes, including 247,998 metres from Detour Gold.

The mineral reserves could potentially increase for the feasibility study as the Company completes its infill drilling program on 40 metre drill spacing and expand the deposit to the west of the Calcite Zone. Thus far, after the cut-off date (June 1, 2009) for the assay results incorporated in this pre-feasibility study, the Company has completed 146 holes totaling approximately 56,000 metres. The Company is confident that a portion of the inferred resources (exceeding 5 million ounces; refer to above table) could be converted to the measured and indicated categories with more drilling and represents the potential to extend the mine life beyond 14.5 years.

Mining and Production

The pit design completed by BBA Inc. ("BBA") resulted in a mine plan containing 238.6 million tonnes grading 1.15 g/t gold. Total gold production over a 14.5 year mine life is estimated to be 8.06 million ounces, averaging 560,000 ounces per year. The life of mine waste to ore ratio is estimated at 3.8 to 1. Summary of the annual mine production plan is outlined below.

Years	Ore Mined (kt)	Ore Milled (kt)	Head Grade (g/t)	Production (oz)	Waste (kt)	Strip ratio
0	1,895	1,062	1.42	45,000	23,625	-
1	22,906	15,398	1.30	590,000	62,394	2.72
2	22,704	16,425	1.41	680,000	70,426	3.10
3	16,425	16,425	1.10	529,000	63,948	3.89
4	16,425	16,425	1.09	527,000	63,681	3.88
5	16,425	16,425	1.07	518,000	76,153	4.64
6	16,425	16,425	1.00	483,000	88,166	5.37
7	16,425	16,425	1.17	567,000	87,763	5.34
8	16,425	16,425	1.09	529,000	83,297	5.07
9	16,425	16,425	1.00	484,000	64,728	3.94
10	16,425	16,425	1.05	509,000	61,182	3.72
11	16,425	16,425	1.11	536,000	58,270	3.55
12	16,425	16,425	1.23	593,000	50,941	3.10
13	16,425	16,425	1.42	687,000	34,892	2.12
14	10,392	16,425	1.26	609,000	18,397	1.77
15	0	8,587	0.69	173,000	0	-
Total	238,573	238,573	1.15	8,059,000	907,861	3.81

Conventional open pit mining methods will be used to mine the Detour Lake deposit utilizing a fleet size of up to 28 haul trucks (300 tonne), 3 electric cable shovels (24.5 m3 to 34.2 m3), 6 drills and various ancillary equipment to support the mining operation. Approximately 14 million tonnes of lower grade ore will be stockpiled during the first two years of operation, which is planned to be processed at the end of the mine life. The open pit design incorporates 10 metre high benches with a 34 metre wide main haul road at a maximium grade of 10%. The mine production daily rate, including waste, is estimated at an average of 220,000 tonnes per day.

Metallurgy, Processing, and Infrastructure

The pre-feasibility study contemplates using a conventional gravity, cyanidation and carbon-in-pulp processing facility operating at approximately 45,000 tpd, assuming 92% operating availability. The process plant design consists of two lines, each having one dual pinion SAG mill (36'X19') and one ball mill (26'X40'). Ore is crushed in a single-stage crushing circuit to K80 150 mm prior to being ground to an 80% passing size of 75 microns in a grinding circuit, with approximately 30% to 50% of the free gold recovered by gravity. The remaining gold in ore is sent to cyanidation with an estimated retention time of 28 hours followed by carbon in pulp (CIP) gold recovery. After carbon stripping, the final gold is recovered through an electrowinning process. Cyanide solution is recovered from the tailings stream for recycling. Final tailings are treated through a cyanide destruction process prior to placing the tailings in an impoundment area. Metallurgical test results and algorithms developed from the test data by Melis Engineering Ltd. were used by Met-Chem and BBA to arrive at a 91.5% average gold recovery for a 1.15 g/t head grade and a 28 hour leach retention time, including allowance for plant losses.


Click to view proposed site plan

Click to view simplified flowsheet
Click to view plant design

The plant design criteria are based on metallurgical tests conducted at various laboratories, including SGS Lakefield Research Ltd. in Lakefield, Ontario.

The pre-feasibility study proposes to construct a 230 (kV) transmission line for the power usage at the mine site using the existing 135 kilometer right of way connection to the power grid. The Company will initially use the same location for the tailings impoundment facility as the former mine. The current design is based on a two-cell downstream containment system with capacity for approximately 270 million tonnes. The surface facilities include a permanent camp and other supporting infrastructure.

Operating Costs

Operating cash costs over the life of the project are projected to average $404/oz. Total operating costs (including royalty) are anticipated to average $420/oz.

	$/t milled	$/t mined	$/oz
Average mining costs	6.18	1.29	183
Processing cost	6.26	-	185
General and administration	1.22	-	36
Operating costs (LOM)	13.66	-	404
Royalty (2%)	-	-	16
Total operating costs (LOM)	-	-	420

Capital Costs Estimates

The pre-feasibility study is based on capital pricing as of the first quarter of 2009. The Company has not yet entered into commitments for long-lead items and as such the level of accuracy of the capital costs estimates is within ±25%. The pre-production capital costs are estimated at $844 million. Sustaining capital expenditure over the operation's mine life is estimated to total $417 million, of which nearly 75% is in the first five years mainly for mining fleet and tailings expansion. Provisions for mine closure amount to $41 million.

The cost breakdown for pre-production capital expenditures, assuming an owner operator scenario, is shown below.

	Estimate ±25% (US$ M)
Description	Pre-production Capital	Sustaining Capital
Mining	109	173
Process Plant	402	20
Tailings and Water Management	19	147
Infrastructure and Services	51
Powerline and Main Sub-station	76
Other Indirect	72
EPCM	42
Contingency (10%)	75	36
Mine Closure		41
Total	844	417

Financial Analysis

The financial analysis for the Base Case (at a gold price of $775/oz), which evaluates an owner's operation, indicates a pre-tax NPV at a 5% discount rate of $621 million with an IRR of 13.5% (unleveraged) and a payback period of 6.2 years. On an after-tax basis, the NPV at a 5% discount rate is $398 million with an IRR of 11.3%. The project is expected to generate $2.8 billion pre-tax operating cash flow.

The table below outlines key sensitivities for the pre-tax NPV and IRR of the Detour Lake project.

Discount rate	Undiscounted	2.5%	Base Case 5.0%	7.5%	10.0%
NPV pre-tax ($ M)	1,596	1,014	621	353	169

Gold price (US$/oz)	$650	$775/oz	$900
NPV pre-tax @ 5% ($ M)	55	621	1,187
IRR (%)	5.8	13.5	20.1

Capex change	+10%		-10%
NPV pre-tax @ 5% ($ M)	519	621	723
IRR (%)	11.7	13.5	15.8

Operating cost change	+10%		-10%
NPV pre-tax @ 5% ($ M)	435	621	807
IRR (%)	11.2	13.5	15.8

Project Development

The Company continues to advance the project towards completion of a feasibility study. The permitting process is currently underway to support a mid-2010 construction start, subject to securing funding to develop the project. The main construction period is estimated at 26 months followed by plant commissioning estimated to commence in the last quarter of 2012.

Detour is committed to working with the aboriginal communities that are potentially impacted by the project. The Company has an established consultation plan and is finalizing Memorandum of Understandings with the goal of outlining how the communities will be accommodated during the environmental assessment period and life of mine. The Company looks forward to the positive impact this development will have in partnership with the aboriginal communities.

The feasibility study will look to improve the economics of the project by:

• Converting inferred resources to reserves with additional drilling
• Stockpiling and processing of low-grade material (grading 0.4 g/t to 0.6 g/t gold), which equates to approximately 100 million tonnes
• Optimizing mill throughput i.e. coarser grinding process (from 75 to 100 microns)
• Optimizing tailings deposition plan for capital and operating savings

The Company is continuing to drill the Detour Lake deposit. An additional 75,000 metres of drilling is expected to be added to the feasibility study, which could positively impact the mineral reserves and thus provide additional flexibility to the mine plan and potential improvements in the project economics.

Detour Gold October 2009 Technical Report - (10.5MB)